Standard content for Members only
To continue reading this article, please login to your Utility Week account, Start 14 day trial or Become a member.
If your organisation already has a corporate membership and you haven’t activated it simply follow the register link below. Check here.
New research from Citizens Advice has suggested 14.5 million people – more than a quarter of adults – will be unable to afford their energy bills if the price cap exceeds £3,000 in October.
The figure was extrapolated from a representative survey of 6,000 people conducted by ICM Unlimited, which indicated 5 million people will already be unable to pay their bills once the new record-high price cap comes into force next month.
Soaring wholesale costs could see a cumulative £145-a-month increase to energy bills when the following price cap takes effect in October, the charity stated in a new report. Citizens Advice said this figure incorporates the government’s support measures announced in February – a £150 council tax rebate from April and a £200 electricity bill discount in October.
The report said prepayment meter (PPM) customers will fare particular badly as they are less able to spread the cost of energy throughout the year. The research found that the average PPM customer could see their monthly bill hit £336 in December 2022 – more than £10 per day. That same usage would have cost them £147 in December 2021.
Their monthly bill is expected to rise even further to £360 in January 2023, although this is smaller than the £428 estimate for the month recently made by the Fuel Bank Foundation.
Citizens Advice said the energy crisis meant that in February of this year 276,000 people sought one-to-one help from the charity – the second highest monthly number since the pandemic. In the same month, more than 24,000 people were referred for crisis support, such as food bank vouchers and charitable support – the highest on record.
The report also cited a separate poll of around 10,300 people by Opinium, which found more than 8 out of 10 (83%) respondents did not expect the £200 electricity bill discount, to be be repaid in £40 instalments over the following five years, to make a significant difference to their ability to pay their energy bills. Almost one in six (16%) instead thought the loan would make it more difficult.
It additionally analysed cases from Citizens Advice’s offices about the impact of the removal of the £20-a-week increase to Universal Credit in October 2021.
In more than a quarter (27%) of cases, adviser notes attributed the need for a food bank referral to the removal of the £20 increase.
Additionally people on unemployment benefit will see the proportion of their allowance spent on energy bills soar to new generational highs.
Citizens Advice analysed energy tariff data against historic benefit levels going back two decades. Even accounting for the £150 council tax rebate, a single person on benefits will still be spending a quarter (25%) of their standard allowance – the basic rate of Universal Credit – on energy bills in April. This compares to just over 10% in 2002.
Looking ahead to October, the charity took two estimates of predicted average energy prices and found that a single person on benefits could end up spending between 39% and 47% of their standard allowance on energy bills.
Citizens Advice is calling on the government to “urgently review” the annual benefits uprating in April.
“Currently pegged to the September level of inflation at 3.1% this will be woefully inadequate in light of today’s spiralling rate of inflation. It will mean a real terms cut to the incomes of millions of households least able to afford it,” the charity said.
It called for a number of actions it believes the government can take to alleviate the strain on households, including turning the rebate loan into a grant or suspending repayments until prices drop to pre-crisis levels, expanding the Warm Homes Discount and smoothing out further price cap rises by limiting increases by a given percentage.
Wake-up call
Clare Moriarty, chief executive of Citizens Advice, said: “These staggering findings must be a wake-up call to the government. With one in four unable to afford their bills come October, measures announced so far simply don’t meet the scale of the challenge.
“Parents shouldn’t have to decide between giving their kids a hot bath or saving the money to buy them new school shoes.
“The chancellor has a crucial opportunity to bring forward more support for those most in need in his Spring statement next week. Increasing benefits in line with inflation, expanding the Warm Home Discount and announcing a more generous energy rebate should be top of his list.”
Please login or Register to leave a comment.